Pccw - Hkt Telephone Ltd and Another v. David Matthew Mcdonald Aitken and Another

HCA1089/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1089 OF 2008

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Coram:  Deputy High Court Judge Au in Chambers (Open to public)

Date of Hearing:   3,4 & 5 July 2008

Date of Handing Down Decision:  10 July 2008

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D E C I S I O N

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I. Introduction

1.On 13 June 2008, the 1^st Plaintiff (“PCCW-HKT”) and 2^nd Plaintiff (“PCCW Services”) obtained an ex parte injunction before Beeson J against the 1^st Defendant (“Mr Aitken”) (PCCW Services’ former employee) and the 2^nd Defendant (“CSL”) (Mr Aitken’s present employer).  Although the application was made on notice, but the Defendants did not appear at the ex parte hearing.

2.The ex parte injunction, the terms of which I will describe in greater detail below, effectively restrains Mr Aitken from being involved in certain activities as part of his present job with CSL and with other persons, and from disclosing or using certain alleged confidential information belonging to PCCW-HKT and PCCW Services (collectively “the Plaintiffs”).  The injunction further restrains CSL from engaging Mr Aitken to do these restrained acts.

3.In detail, the ex parte injunctive orders obtained by Plaintiffs are as follows:

(1)  Mr Aitken be restrained until the trial of the action herein or until further order from having any involvement, whether direct or indirect, in fixed-mobile interconnection issues related to or arising out of the Statement of the Telecommunication Authority dated 27 April 2007 entitled “Deregulation for Fixed-Mobile Convergence”, including but not limited to (a) negotiation of fixed-mobile interconnection terms and conditions, (b) actual or contemplated proceedings (including court proceedings and appeals to the Telecommunication (Competition Provisions) Appeal Board) relating to fixed-mobile interconnections, (c) seeking the determinations, determination proceedings or directions from the Telecommunications Authority under the Telecommunications Ordinance (Cap 106) relating to fixed-mobile interconnection, (d) issues concerning fixed-mobile interconnection tariffs (including the Unified Interconnection and Local Access Service Tariff that was published by PCCW in the Hong Kong Special Administrative Region Gazette No. 32/2007 on 10 August 2007 and the revised terms of Interconnection of Public Mobile Radiotelephone Service, etc. tariff published in the Hong Kong Special Administrative Region Gazette No. 21/2008 on 23 May 2008).

(2)  Mr Aitken shall keep confidential and not disclose to, or use for the benefit of, CSL or any other person any confidential information of the Plaintiffs to which he is privy, whether in relation to the above issues or otherwise.

(3)  Mr Aitken shall not discuss or permit to be discussed in his presence anything relating to the above issues.

(4)  CSL shall be restrained (a) from involving Mr Aitken, whether directly or indirectly in any way in the above issues and (b) from discussing or permitting discussion of the above issues in the presence of Mr Aitken and (c) from requiring, permitting or procuring Mr Aitken to act contrary to subparagraphs (1) to (3) above.

(5)  The above orders are without prejudice to the right of Mr Aitken and CSL to take legal advice from, and to instruct, their respective solicitors and counsel.

(6)  All parties have liberty to apply on notice, if necessary on an expedited basis, to vary this order.

4.The ex parte injunction was continued by the order of Poon J dated 20 June 2008 until the determination of the Plaintiffs’ Summons, which seek the same interlocutory reliefs until trial. 

5.It can be seen from the terms of the above ex parte order that, they are very wide in their scope, and that there are no definition or particulars provided to qualify the reference to “confidential information”.

6.This is the hearing of the Plaintiffs’ Summons, and the Summonses issued by Mr Aitken and CSL respectively on 25 and 27 June 2008 seeking (a) to set aside or discharge the ex parte injunction, and (b) an enquiry into damages suffered by them as a result of the wrongful grant of the ex pate injunction.  Mr Aitken and CSL obviously also oppose the Plaintiffs’ Summons as well.

II.  Background

7.In order to understand properly the meaning of the above orders, and why the Plaintiffs are seeking them, it is necessary for me to first set out the background leading to the dispute and the ex parte application.

8.Unless otherwise stated, the following background facts are uncontroversial.

The telecommunications industry and the parties

9.The telecommunications industry in Hong Kong is highly regulated.  The Telecommunications Authority (“TA”) is the body mainly entrusted with the powers and duties to administer and oversee the regulations in the industry under the Telecommunications Ordinance (“TO”).

10.PCCW-HKT is member of the PCCW group, and one of the Fixed Networks Operators (“FNOs”) in the telecommunications in Hong Kong.

11.PCCW Services is also a member of the PCCW group, and acts as the employment services vehicle for the group, including PCCW-HKT.

12.CSL is one of the Mobile Networks Operators (“MNOs”) in the telecommunications in Hong Kong.

13.The respective FNOs and MNOs in Hong Kong are issued with a relevant licence to enable them to operate the respective fixed line and mobile networks.  These licences come with the relevant guidelines and regulations governing the operation of the particular networks.  There are different licensing rights and obligations for these two types of operators.

14.Given the two separate and independent fixed and mobile telephone networks, there is the need for interconnections between them for calls made to and from one network to another.  Under the existing applicable regulations and guidelines, there are charges for such fixed mobile interconnection, known as the Fixed-Mobile Interconnection Charges (“FMIC”).  The present regulatory regime for FMIC is that the Mobile Party Network Pays (“MPMP”), meaning that it is always and only the MPOs who pay for the interconnecting charges.

15.The annual revenue generated under the existing FMIC and MPMP regime is about $600 million, and PCCW (being the major FNO) receives about 2/3 of this.

16.At the same time, as the market develops with the technological advancement, the distinctions between fixed and mobile networks and services are increasingly becoming blurred.  This phenomenon is commonly referred to as Fixed Mobile Convergence (“FMC”).

17.Mr Aitken is a solicitor admitted to practise in New South Wales, Australia in 1997.  He is however not admitted or registered in Hong Kong to practise as a solicitor or as a foreign lawyer.  Since admission in NSW, he had worked as a solicitor in private practice in Australia for about 5 to 6 years.  He then worked as an “in-house” lawyer for an Australian telecommunications company in Australia for about 2 years.   Between August 2005 and February 2007, he came to Hong Kong and was employed by CSL as Legal Advisor, Legal and Regulatory Affairs.  During his work with CSL at that time, he was involved in, inter alia, FMC, FMIC and interconnection regulatory matters.

18.By way of an employment contract dated 29 November 2006, Mr Aitken joined PCCW in March 2007 as its General Manager, Regulatory Compliance.  Although it was PCCW Services which formally offered the employment contract, there appears to be no dispute that Mr Aitken effectively worked for the PCCW group, including PCCW-HKT. While working for PCCW, Mr Aitken reported to Mr Chiron, Director for Regulatory Affairs.   

19.There was a three-months non compete clause provided in the employment contract, which prohibits Mr Aitken from working with PCCW’s competitors for a period of three months post termination of the employment contract.

20.In taking up the position, Mr Aitken also signed a Confidentiality/Intellectual Property Undertaking (“the Confidentiality Undertaking”), where by he undertook not to divulge or disclose any confidential information or trade secrets of the PCCW Group obtained by him via his employment.  This undertaking is expressly provided to apply during and post termination of Mr Aitken’s employment.

The TA’s 2007 Statement

21.In April 2007, the TA issued a Statement (“The 2007 Statement”) entitled “Deregulation for Fixed-Mobile Convergence” about the TA’s decisions on various regulatory changes that concerns FMC.  One of these decisions is that by April 2009, the existing FMIC regime (i.e., the MPMP policy) will expire, and the TA leaves it to the FNOs and MNOs to negotiate amongst themselves for the new terms and conditions concerning interconnection and interconnecting charges.   At the same time, the TA also decides to retain what is known as the Any-to-Any Connectivity (“A2A”) regime.  Under the A2A regime, there is an obligation on the FNOs and MNOs to interconnect with each other.

22.It is PCCW’s case that, during his employment with it, Mr Aitken had been closely involved in various confidential and privileged internal and external discussions and conferences, in which confidential discussions were made on issues arising out from the 2007 Statement and a number of legal proceedings taken out by PCCW relating to (a) the 2007 Statement, and (b) matters having an indirect impact on the FMC and FMIC issues before the 2007 Statement. 

23.The nature of these proceedings is as follows.

Appeal 25

24.After the issue of the 2007 Statement, in May 2007, PCCW lodged an appeal to the Telecommunication (Competition Provisions) Appeal Board (“the Appeal Board”) against the decisions made in 2007 Statement, seeking the Appeal Board to quash the 2007 Statement, and to make other orders as it considered appropriate.   This appeal is known Appeal 25.

25.The broad grounds of the appeal under Appeal 25 are that (a) the TA has exceeded its lawful power under the TO in making the decisions under the 2007 Statement, (b) the TA has erred in law and/or on facts in making those decisions as it was an unlawful use of its powers under the Ordinance and/or that there was no or no proper basis to enable the TA to make those decisions, (c) the terms of the 2007 Statement are in any event unreasonable.

26.The TA challenged the Appeal Board’s jurisdiction in hearing the appeal.  Both sides had engaged leading counsel from London to argue before the Appeal Board on this jurisdictional objection. 

27.By its judgment dated 2 April 2008, the Appeal Board decided that it had no jurisdiction to hear the appeal.  PCCW has made an application o the Appeal Board for a case to be stated to the Court of Appeal in relation to this decision.  The Appeal Board has not made a decision on this application, pending written submissions from the parties.

Appeal 24 and HCAL 6/2006

28.On 7 November 2006, the TA issued a direction relating to the terms of interconnection between PCCW-HKT and another FNO, Wharf T&T Ltd.   Soon thereafter, PCCW-HKT lodged and appeal against this direction, and it is said by the Plaintiffs that the appeal touches on (a) the scope of TA’s authority to regulate the terms of interconnection of FNOs and other operators, (b) the scope of the A2A.   The appeal is known as Appeal 24.

29.The TA challenged the jurisdiction of the Appeal Board to hear and determine Appeal 24.  In March 2008, the Appeal Board rejected the jurisdictional objection.  A trial date has now been provisionally fixed for January 2009 to determine the appeal proper.  PCCW-HKT has retained London leading counsel and Hong Kong counsel to represent them.

30.In January 2007, PCCW-HKT also applied for judicial review of the TA’s above direction under HCAL 6/2007.   Reyes J dismissed the application for judicial review by a judgment dated 1 June 2007.  In June 2008, by agreement on terms reached between PCCW-HKT and TA, PCCW-HKT withdrew its appeal against Reyes J’s said order.

Mr Aitken’s departure from PCCW and joining of CSL

31.In January 2008, Mr Aitken gave a three-months’ notice to terminate his employment with PCCW. 

32.After tendering his resignation, Mr Aitken also sought in writing PCCW’s consent to waive the three-month non compete clause, as he would be joining CSL, a competitor to PCCW.  He reiterated that he would comply with the Confidentiality Undertaking.   The waiver was given by PCCW after Mr Aitken had discussed the same with Mr Chiron.

33.Mr Chiron says he only gave his consent to the wavier as Mr Aitken told him that he (Mr Aitken) was to take up a role at CSL focusing on corporate affairs, external relations and non-regulatory legal matters.   Mr Chiron understood this to mean that FMIC issues would fall outside the ambit of Mr Aitken’s new role at CSL.

34.Mr Aitken does not accept Mr Chiron’s above version of the conversation.  Mr Aitken says that in the meeting, he told Mr Chiron that at CSL, he would be involved in works that were broader in nature from what he was doing at PCCW.  He would work in areas of public policy, media type work, and “not only in regulatory compliance but also general regulatory affairs work in the general sense”.   Mr Aitken says that “general regulatory affairs work in the general sense” by definition includes works relating to interconnection and FMIC issues.

35.Mr Aitken eventually joined CSL after leaving PCCW, as CSL’s Head of Regulatory and Corporate Affairs.   It is part of his duties under regulatory affairs to deal with matters concerning FMIC and interconnection issues. 

CSL’s press conference and release on 25 May 2008 and events leading to the present action and the ex parte injunction

36.On 23 May 2008, PCCW-HKT announced an increase in its connection tariff by 25%.   In other words, MNOs have to pay this increased tariff for calls interconnecting with PCCW’s fixed net works until the MPMP regime expires in April 2009.

37.On 25 May 2008, CSL held a press conference, which was attended by CSL’s CEO and Mr Aitken as its Head of Regulatory and Corporate Affairs.   At the conference, CSL opposed and criticized PCCW-HKT’s said “unilateral increase” in the interconnection tariff.  It also criticized TA’s approval of the same without consultation, in particular in light of the soon to expire FMIC regime and the overall deregulation approach set out in the 2007 Statement.    CSL’s CEO further said “CSL will not allow this to go unchecked and will take all legal action in its power to enforce its rights as well as to prevent harm to consumers”.

38.CSL issued a press release summarizing the above.  It is provided in the release that Mr Aitken was the person to contact for further information.

39.On 8 June 2008, CSL lodged and appeal with the Appeal Board against the TA’s decision to approve PCCW’s interconnection tariff increase.  This is known as Appeal 26.

40.Mr Chiron subsequently came to be aware of CSL’s press release.  He said he was surprised to learn that Mr Aitken was involved in these FMIC related matters for and on behalf of CSL, given his own understanding that Mr Aitken would not be dealing with such regulatory matters for CSL.  

41.Mr Chiron also says that on 4 June 2008, Mr Aitken told him over the phone that he (Mr Aitken) had “something to do with” the FMIC issue and he was doing some “regulatory work”.   Mr Aitken also said he would be involved in any litigation concerning CSL under the leadership of CSL’s general counsel.

42.Mr Chiron says he was concerned after knowing Mr Aitken’s involvement with these issues at CSL, as he was formerly closely involved in PCCW’s discussions concerning the same issues. 

43.After seeking legal advice, the Plaintiffs’ solicitors, Herbert Smith (“HS”), wrote Mr Aitken and CSL on 5 June 2008. 

44.In the letter to Mr Aitken, it was stated that Mr Aitken was privy to much PCCW’s confidential information relating to the issues on interconnection between PCCW and MNOs.   It further reminded Mr Aitken of the Confidentiality Undertaking and what they believed to be the relevant law in this area.    It then asked Mr Aitken to let them have the details as to the scope of his role at CSL and whether he had made use of any PCCW’s confidential information while performing his role to CSL.  It also sought a written undertaking from Mr Aitken that (a) during his employment with CSL, he would not be involved directly or indirectly in, or to be present in any discussions concerning, any fixed-mobile interconnection issues arising out of the 2007 Statement, and (b) not to use or disclose any of the PCCW’s confidential information for the benefit of CSL. 

45.In the letter to CSL, it attached HS’s above letter to Mr Aitken.  It stated expressly that CSL was put on notice as to Mr Aitken’s “unlawful actions”, and asked CSL to immediately cease Mr Aitken’s involvement in such matters.   It also asked CSL to give a written confirmation that it would act consistently with Mr Aitken’s undertakings, if given, as sought by PCCW.

46.The letters also stated expressly that, failing any favourable reply from Mr Aitken and CSL, PCCW would make an application for injunctive relief of similar terms as sought from Mr Aitken.

47.On 10 June 2008, Mr Aitken replied by a letter.  He denied having breached or having any intention to breach the Confidentiality Undertaking.  He also asked PCCW to provide particulars as to the relevant confidential information based on which PCCW made the allegations against him.   Obviously Mr Aitken did not provide the undertakings as sought.  He also did not provide the details of his role within CSL as asked by PCCW.

48.As mentioned earlier, armed with a draft generally endorsed writ and the supporting affidavits, on 13 June 2008, the Plaintiffs went before Beeson J and obtained the ex parte injunction against Mr Aitken and CSL.

III.    The present applications

A.  Applicable principles

49.I consider the following legal principles of general relevance for the purpose of the present applications.

A.1    Interlocutory injunction

50.It is common ground that the applicable principles governing the grant of interlocutory injunctions are those laid down in American Cyanamid Co. v. Ethicon [1975] A.C. 396.  They can be summarized as follows:

(1)  Whether there is a serious question to be tried on the plaintiff’s claim and the reliefs sought.  If the answer is negative, no interlocutory injunction would be granted.

(2)  After satisfying with question (1) above, the Court should proceed to ask the following questions:

(a)  Whether damages would be a sufficient remedy for the plaintiff if the interim injunction is not granted.  If the answer is affirmative, generally no interlocutory injunction would be granted. 

(b) If the answer is negative, then the Court should ask whether damages are a sufficient remedy for the defendant even if the injunction is wrongly granted. If the answer to this question is in the positive, the interlocutory injunction should usually be granted. 

(3)  If the answer to (2)(b) is also negative, then the court should proceed to consider all the circumstance as to whether on the balance of convenience, the injunction should be granted to preserve the status quo ante.

See:  Hong Kong White Book, paras 29/1/10 – 29/1/15.

A.2    Claim for an injunction on confidential information

51.It is well established that in seeking injunction in a claim for misuse of confidential information or trade secrets, it is of utmost importance and necessary to provide proper and sufficient particulars of the relevant confidential information.   This is so because the defendant employee must know clearly what he could and could not do in relation to certain information.  Thus, in Lock v Beswick [1989] 1 WLR 1268 Hoffmann J (as he then was) said at 1274B-C:

“It is therefore of the essence of a claim against an employee for misuse of confidential information that the employer should be able to identify with particularity the trade secret or similar confidential information  to which he lays claim.  The terms of any injunction must also be capable of being framed in sufficient detail to enable the defendant to know exactly what information he is not free to use on behalf of his new employer.”

52.Thus, it is undesirable and inappropriate to have an injunction order expressed to restrain the use or disclosure of simply “confidential information”, since it is too vague and difficult to police.  Moreover, an interlocutory injunction should only be in such terms to provide what is of minimum necessity for the protection to the claimant until trial against any misuse of the information alleged to be confidential.  See: AG v Punch [2003] 1 AC 1046 at paras 34 and 35 per Lord Nicholls, and para 111 per Lord Hope:

“34.

This situation gives rise to a practical difficulty in the formulation of an interlocutory injunction.  It is a difficulty of a type familiar enough in the drafting of many forms of interlocutory injunctions.  What is needed, so far as this can be achieved, is a form of words which is apt to keep confidential until the trial the information whose disclosure arguable poses a risk of damaging national security but which is not wider in its scope.  In principle, an order having a wider scope is not sustainable as a necessary restriction…

35.

Here arises the practical difficulty of devising a suitable form of words.  An interlocutory injunction, like any other injunction, must be expressed in terms which are clear and certain.  The injunction must define precisely what acts are prohibited.  The court must ensure that the language of its order makes plain what is permitted and what is prohibited.  This is a well established, soundly based principle.  A person should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute.  An order expressed to restrain publication of ‘confidential information’ or ‘information whose disclosure risks damaging national security’ would be undesirable for this reason.”

“111.

I take as my starting point for an examination of this issue the principle that an injunction must always be expressed with precision and with clarity.  As Lord Deas put in a Scottish case, if an injunction is to be granted at all, it must be in terms so plain that he who runs may read: Kelso School Board v Hunter (1874) 2 R 228, 230.  This is because of the penal consequences that will follow if it is breached.  Then there is another important principle.  The prohibition must extend no further than is necessary to serve the purpose for which the order is to be made.”

53.In Gilman Engineering v Simon Ho (1986) 8 IPR 313, Liu J also said at p 324:

“There seems to be all the more reason, therefore, for an injunction order to be couched in specific and precise terms as to what must not be disclosed or used.  In para. (2) as amended, the plaintiff merely refers to ‘confidential information’.  Unless these matters are sufficiently identified and particularized, an ex-employee would be placed in a most embarrassing if not altogether a hopeless situation, particularly in the narrower meaning of confidentiality as given in the Faccenda Chicken case.  Any injunction order granted in broad general terms would be impractical in the extreme.”

54.Further, the law on confidential information in an employer and employee relationship has been fully set out in Neil LJ’s five propositions in the well known case of Faccenda Chicken v Fowler [1987] 1 Ch 117 at 135F-137F.  They can be summarized as follows:

(1)  As between employer and employee, the obligations between them are to be determined by the contract of employment.

(2)  In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms.

(3)  There is an implied term in a contract of employment imposing a duty of good faith or fidelity on the employee during the course of his employment. 

(4)  The implied term imposing an obligation on the employee post-termination of his employment is more restricted than that imposes a general duty of good faith.  This imposes an obligation on the employee even post termination not to use or disclose any trade secrets or other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret.  

(5)  Whether any particular item of information falls within the implied term to prevent its use or disclosure by an employee post termination of the employment, the court has to consider all circumstances of the case, including (a) the nature of the employment, and (b) the nature of the information itself.   However, it is impossible to provide a list of matters which will qualify as trade secrets or their equivalent.

See also:  Oriental Machinery Ltd v Choi Kin On (unrep., HCA 1719/2000, 21 November 2001, Deputy High Court Judge Lam), at para 25.

55.It is also noted that there is no universal formula for determining what is trade secret or item of equivalent confidentiality. It is a question of degree, and depends on the nature of the employment, the nature of the information, the extent to which the employer impressed the information’s confidentiality upon the employee and the ease with which the information could be isolated from the other information the ex-employee was free to use: see Faccenda Chicken at 137B-139A; Toulson, Confidentiality (2^nd ed), para 14-012 and 14-013.

B.  The Plaintiffs’ claims as pleaded

56.In accordance to their generally endorsed writ:

(1)  The Plaintiffs claim against Mr Aitken for breach of fiduciary duty, breach of contract and breach of confidence. 

(2)  The Plaintiffs claim against CSL for (a) procurement or inducement of Mr Aitken’s breach of contract, confidence and/or fiduciary duties, and (b) unjust enrichment. 

(3)  The Plaintiffs seek against Mr Aitken and CSL for inquiry as to damages, account of profits and permanent injunctive reliefs similar to the terms under the ex parte order.

C.  Mr Aitken and CSL’s opposition to the ex parte and interlocutory injunction

57.In summary, Mr Aitken and CSL say the ex parte order should be set aside or discharged, and no interlocutory injunction in the terms as sought by the Plaintiffs should be granted since:

(1)  The Plaintiffs have failed to show a serious question to be tried on:

(a)  A proper cause of action in breach of confidence and/or contract against Mr Aitken.

(b) Mr Aitken having in his possession the relevant confidential information which would warrant the injunctive relief sought.  In particular there is lack of particulars on the alleged relevant confidential information.

(c)  Mr Aitken being in breach or in threatened breach of confidence.

(d) CSL is liable for procurement or inducement of Mr Aitken’s breach of confidence.

(e)  The Plaintiffs are entitled to an injunctive relief which amounts to a restraint of trade clause.

(2)  The injunction should not be granted as Mr Aitken would suffer irreparable damage if one is granted.

(3)  The terms of the ex part order are too wide and vague.  They are therefore excessive and should not have been granted.

(4)  There is material non disclosure when the Plaintiffs applied for the ex parte order.

D.  Discussion

D1.    Serious question to be tried

D1.1  No cause of action shown

58.Mr McLeish, counsel for CSL, submits that the Plaintiffs have failed to show even a cause of action in breach of contract, fiduciary duty and confidence against Mr Aitken.  As such there is similarly no cause of action against CSL.  There is no serious question to be tried at all.

59.Insofar as the duty not to disclose confidential information post termination of employment (as in the present case) is concerned, I accept Mr McLeish’s submission that there appears to be no question of a breach of fiduciary duty, since a fiduciary duty ends at the same time as the termination of the employment.  See: Prince Jefri Bolkiah v KPMG [1992] 2 AC 222 at 235C-E per Lord Millet.

60.However, I cannot accept Mr McLelish’s submissions that there is no serious question to be tried on the existence of the cause of action under contract and breach of confidence.  There is clearly a duty imposed on Mr Aitken not to disclose confidential information post termination: 

(1)  Under the Confidentiality Undertaking, Mr Aitken expressly agreed not to disclose confidential information post termination of his employment with PCCW.

(2)  There is an implied duty in his employment not to disclose trade secrets or trade secrets equivalent confidential information post termination: see Faccenda Chicken, supra.

61.In my view, given these duties, and looking at the evidence in relation to the background set out above, I accept that there is at least a serious question to be tried on the existence of the causes of action in breach of contract and confidence.

D1.2  The lack of particulars on what is the relevant confidential information and a case of breach of confidence

62.As a start, Mr Burns SC for Mr Aitken and Mr McLeish for CSL fairly accept that, if the Court accepts that there is a serious question to be tried that Mr Aitken is in possession of the relevant confidential information or trade secrets, there is also a serious question to be tried on whether the identified information could be protected from misuse or wrongful disclosure by a suitably drafted interlocutory injunction.

63.Mr Burns SC and Mr McLeish however contend that the Plaintiffs have failed to show a triable case of the alleged relevant confidential information.   As far I understand it, there are two principal attacks under this head.

64.First, it is said the Plaintiffs have failed to provide sufficient particulars of what is alleged to be the confidential information that has been imparted to Mr Aitken during his course of employment with PCCW.  Failing this, (it is further submitted) there cannot be any serious question to be tried on what is the relevant confidential information that could subject to protection by the law of confidence and an interlocutory injunction. 

65.Secondly, the Plaintiffs have also failed to show a serious question to be tried on the linkage between the so-called confidential information and the scope of injunctive relief sought.  In other words, they have failed to show that the terms of the injunction sought are appropriate to protect against the disclosure of the information.

66.The Plaintiffs’ descriptions and categorizations of the relevant confidential information they say Mr Aitken has been imparted with, are set out in various parts of the affidavits of Mr Chiron and Mr Crosswell.  As far as I can see, they can be summarized as follows:

(1)  Aitken had been privy to confidential information (obtained via various privileged meetings, conferences and communications) as to PCCW’s legal, commercial and strategic positionsin relation to the FMIC issues arising out of and in connection with the 2007 Statement.   

(2)  Mr Aitken is in possession of privileged and confidential information in relation to the issues arising from Appeal 25, as he had been privy to the privileged communications between PCCW and its external legal advisers over the period between April and October 2007.   He was involved in the meetings discussing possible challenges to the 2007 Statement by way of judicial review.

(3)  Mr Aitken was closely involved in the various confidential and privileged meetings, email correspondence and other communications with PCCW’s external legal advisers over the period from late March to October 2007 in relation to Appeal 24 and HCAL 6/2007.  He is privy to PCCW’s understanding of its legal position and of the relationship between these cases and the broader FMIC issues as seen by PCCW.  In particular, A2A policy was a central focus in HCAL 6/2007, and Mr Aitken was exposed to considerable highly confidential and privileged correspondence between PCCW, Herbert Smith and counsel for PCCW during the course of preparation for its hearing.

(4)  In the months following the publication of the 2007 Statement, Mr Aitken had attended numerous internal meetings as well as external meetings and communications with legal advisers, in which the legal and strategic issues in connection with the 2007 Statement and PCCW’s possible responses to it had been discussed.    They include consideration of the market power issues (such as whether the FNOs and MNOs would be considered, legally, to have relevant market power in interconnection negotiations so as to raise the issue of abuse of that market power, a contravention of the Telecommunications Ordinance) and of the enforceability of the obligation of mandatory interconnection that the TA was contending it had power to enforce as against PCCW.

(5)  On 30 May 2007, Mr Aitken attended a meeting with Mr Chiron, Mr Crosswell (of Herbert Smith), Mr Johnston (of Herbert Smith by telephone link), Ms Winifred Lo, Mr Kevin Chu, Mr Tang Wing Ho and Ms Cindy Au.  In this meeting, very broad ranging conceptual discussion of legal strategy issues concerning FMC and FMIC, including the position of the MNOs in FMIC negotiations and related competition law issues were held. 

(6)  Mr Aitken was privy to a document circulated by Mr Crosswell on 6 June 2007 entitled “PCCW/FMC Statement Potential Legal Avenues of Challenge – Scoping Document”, which considered in detail potential legal avenues available to PCCW following the issue of the 2007 Statement and the legality of the A2A obligation that the TA was relying on in relation to FMIC negotiations between the FNOs and the MNOs.

(7)  On 7 June 2007, there was a meeting between the Herbert Smith Team and the PCCW Team (including MR Aitken) to discuss the above scooping document.

(8)  On 15 June 2007, Mr Crosswell sent a 59 page draft instruction to counsel containing 29 pages of detailed appendixes to the PCCW team, including Mr Aitken, which went through a detailed analysis of the 2007 Statement and potential grounds of legal challenge.

(9)  Mr Aitken was privy to the email sent by Mr Crosswell on 20 June 2007 to Ms Winifred Lo and Mr Kevin Chu, seeking further information for the draft  instruction to counsel circulated on 15 June 2007.   Mr Aitken was also privy to the final instruction sent to Mr Pannick QC on the same day.

(10) Mr Aitken was privy to Mr Pannick QC’s advice received by Herbert Smith on 4 July 2007 concerning the grounds on which the 2007 Statement could be challenged.

(11) On 5 July 2007, Mr Aitken attended a telephone conference with members of the PCCW Team and the Herbert Smith Team to discuss Mr Pannick QC’s advice.

(12) On 10 July 2007, Mr Aitken attended a telephone conference with Mr Pannick QC with Mr Crosswell, Ms Cindy Au and Mr Chiron to discuss the advice. 

67.I understand that Mr Aitken’s case is that, he has obtained no relevant confidential information while working at PCCW at all.  It is also his evidence that his involvement with any of the so-called privileged meetings, conferences and communications was at best peripheral, given his prior confidentiality commitment with CSL (as his previous employer) on FMC/FMIC issues and his many other duties as the General Manager of Regulatory Affairs at PCCW.  I also note Mr Aitken’s evidence that he could hardly remember any of the privileged meetings he had attended whether in relation to the legal proceedings or other internal discussions.

68.However, for the present purpose, I am satisfied with the evidence before me, including the documentary evidence exhibited to the Plaintiffs’ various affidavits relating to Mr Aitken’s involvement and participations in the various meetings and discussions, that there is at least a triable case on whether Mr Aitken was actively and centrally involved in all the above activities and meetings as alleged by the Plaintiffs.  As such, I am also satisfied that there is a serious question to be tried on whether Mr Aitken was privy to the above information as suggested by the Plaintiffs.  It is pertinent to note that Mr Aitken has not denied that there are these meetings, conferences or communications.

69.The crucial question I have to decide for these applications, is whether the Plaintiffs’ above evidence provides sufficient particularity to support a triable claim in confidential information, which warrants the grant of an interlocutory injunction to protect it from any misuse or unlawful disclosure.

70.On this question, it should be noted that:

(1)  As submitted by Mr Whitehead, SC for the Plaintiffs (which is not disputed), the evidence shows that (a) the telecommunications industry in Hong Kong is highly competitive, in particular as between FNOs and MNOs, and (b) the position held by PCCW as FNO is diametrically different from CSL’s position under various issues concerning FMC/FMIC and arising out from the 2007 Statement.

(2)  All parties accept in their evidence that FMC/FMIC issues are the single most important issue that affects the telecommunications industry in Hong Kong in the next 12 months or some time to come thereafter.

71.After considering the evidence from all the parties in its entirety, and after taking into account of the uncontroversial background matters set out above and at paragraphs 70(1) to (2), and after reminding myself that this is an interlocutory application, I have come to the following conclusions:

(1)  The descriptions of the groups or classes of information set out at paragraphs 66(1) to (4) are too general and vague, which lack in my view sufficient particulars to enable the Court to identify with sufficient certainty and particularity as to what this information is.  As so phrased and described, these classes or groups of information do not constitute arguably any confidential information recognized in and protectable by the law of confidence.  See the general principles set out in paragraphs 51 to 55 above.

(2)  Moreover, I accept Mr Burns’ submissions that any information obtained from the discussions held by PCCW’s legal teams on, and legal advices given in relation to, HCAL 6/2006 must have been spent by now, and could no longer amount to confidential information for the present purpose.  This is so, as all the possible legal arguments must have been already canvassed at the hearing before Reyes J, and discussed in the learned judge’s judgment.   PCCW’s decision to withdrawn the appeal under HCAL 6/2006 further shows that all legal matters and considerations arising thereunder must have been considered by PCCW as no longer live issues.  

(3)  For the above reasons, I do not think the Plaintiffs have established any triable case on an enforceable right against the information concerning the one set out in paragraphs 66(1) to (4) above.

(4)  On the other hand, I find that the classes of information set out at paragraphs 66(5) to (12) are sufficiently particularized to support at least a triable claim in confidential information.  

(5)  In light of the circumstances in which it was imparted and the purpose of the information, I am also satisfied that the groups and nature of this information constitutes at least arguably trade secrets or trade secret equivalent confidential information.

(6)  In my view, the discussions (written or oral) on the legal positions that PCCW could or could not adopt in relation to a potential challenge to the 2007 Statement, an important document affecting that PCCW’s legal or commercial rights, and the discussions on the commercial positions of PCCW vis-à-vis the commercial negotiations between FNOs and MNOs for FMIC as anticipated under the 2007 Statement, must at least arguably amount to highly confidential information equivalent to trade secrets.  This is particularly so given the highly competitive environment of the telecommunications industry in Hong Kong as between FNOs and MNOs, and the diametrical positions held by PCCW as a FNO and CSL as a MNO concerning FMC/FMIC issues.   Such information thus is arguably highly sensitive and confidential, and the disclosure of which to CSL would prejudice PCCW’s position and bargaining power in negotiating any commercial terms with CSL.  

(7)  In the circumstances, I accept that there is a serious question to be tried that (a) the information set out under paragraphs 66(5) to (12) above is trade secret or trade secret equivalent, and (b) is thus  “linked” to the need for a protection by way of a suitably drafted interlocutory injunction.

72.For the above reasons, I am satisfied that the Plaintiffs have shown that there is a serious question to be tried that:

(1)  Mr Aitken is in possession of confidential information equivalent to trade secret.

(2)  There is a risk of misuse or disclosure of such information.

(3)  This information should be protected by a suitably drafted injunction.

D1.4  The injunctive relief sought amounts to a restrain of trade, and should not be granted

73.It is Mr Burns SC’s submissions that paragraphs 1 and 3 of the interlocutory injunctive reliefs sought by the Plaintiff under their Summons amount to a restraint of trade.  As such, they should not be granted as a matter of law.  Further, they are also clearly too wide and unreasonable in all the circumstances.

74.Mr Burns submits that the general law under confidential information is that the equitable remedy of an injunction in the form of restrain of trade is not be granted, and the proper way for an employer who prevent competition is by way of extracting a reasonably drafted restraint of trade clause in the employment contract.  Mr Burns relies on Faccenda Chicken at pp 137G-138A, approving Cross J in Printers & Finishers Ltd v Holloway [1965] 1 at 6, which says as follows:

“…Although the law will not enforce a covenant direct against competition by an ex-employee, it will enforce a covenant reasonably necessary to protect trade secrets … If the managing director is right in thinking that there are features in the plaintiff’s process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employee restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds.”  (emphasis added)

See also:  Balston Ltd v Headline Filters [1987] FSR 330; G D Searle & Co Ltd v Celltech Ltd [1982] FSR 92 at 99.

75.Further, Mr Burns says Mr Aitken’s employment contract did contain a three-months non compete restrain of trade clause.  This was however waived by the Plaintiffs.  They cannot in the name of purported protection of confidential information extract one back when they have given it away themselves.

76.Finally, the injunctive reliefs sought under paragraphs 1 and 3 of the Plaintiffs’ Summons are even wider than the contractual three-months non complete provision, by effectively lengthening the agreed non complete period.  It is submitted that the Plaintiffs cannot possibly obtain something even better than what they could have got under an express restrictive covenant.  It should be noted that the Plaintiffs seek the same form of permanent injunction in their writ against Mr Aitken.  Mr Burns contends that the Plaintiffs can never obtain such a relief as it amounts to a permanent restraint of activities or trade of a former employee, which no court would grant.  It is thus submitted that if the Plaintiffs cannot possibly obtain this relief at trial, they could not be in a better position interlocutory.

77.There is considerable force in Mr Burns’ submissions, in particular in light of the authorities of Faccenda Chicken and Printers & Finishers Ltd v Holloway cited above. 

78.Mr Whitehead however submits that for the present case, the guiding principles should be those set out by the House of Lords under the Bolkiah case, which supports the grant of an injunction to protect confidential and privileged information by restraining a person from carrying out certain acts in his profession.

79.In Bolkiah, the plaintiff (Prince Bolkiah) was at one time the head of a secret investment body set out by the government.  While still acting as the head of the investment body, a firm of auditors (KPMG) also acted for the Prince in matters relating to his own litigations.  For that purpose, KPMG provided certain services to the Prince usually undertaken by litigation solicitors.  Through such services provided, KPMG obtained the Prince’s confidential information on, inter alia, the whereabout of his assets and their values.  Later, the Prince fell out of favour in the royal hierarchy and was replaced as head of the investment body.  Then, the government commenced investigations of certain alleged wrongdoings of the Prince while acting as head of the investment body, including misappropriating and siphoning away assets of the government under the investments.  The government sought to engage KPMG to assist in the investigations in, inter alia, identifying of the alleged wrongdoings of the Prince and the misappropriated assets.

80.The Prince applied for an injunction restraining KPMG from acting for the government, so as to prevent KPMG from misusing or wrongfully disclosing the Prince’s confidential information they had obtained to his prejudice.  There was no dispute that KPMG had the relevant confidential information.  However, they argued that the Chinese wall implemented within the firm would sufficiently and reasonably prevent any wrongful use or misuse of the confidential information.  The judge at first instance granted the injunction, which was discharged by the Court of Appeal.  On further appeal, the House of Lords reinstated the injunction. 

81.Lord Millet delivered the leading speech.  The relevant principles that can be derived from his speech have been summarized by Clarke LJ in Koch Shipping v Richards Butler [2002] 2 All ER (Comm) 957 at para 25 (pp 962-963) as follows:

(1)  The court's jurisdiction to intervene is founded on the right of the former client to the protection of his confidential information (per Lord Millett at p.234).

(2)  The only duty to the former client, which survives the termination of the client relationship, is a continuing duty to preserve the confidentiality of information imparted during its subsistence (per Lord Millett at p.235).

(3)  The duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so (per Lord Millett at p.235).

(4)  The former client cannot be protected completely from accidental or inadvertent disclosure, but he is entitled to prevent his former solicitor from exposing him to any avoidable risk. This includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information may be relevant (per Lord Millett at pp.235-236).

(5)  The former client must establish that the defendant solicitors possess confidential information which is or might be relevant to the matter and to the disclosure of which he has not consented (per Lord Millett at pp.234-235).

(6)  The burden then passes to the defendant solicitors to show that there is no risk of disclosure. The court should intervene unless it is satisfied that there is no risk of disclosure. The risk must be a real one, and not merely fanciful or theoretical, but it needs not be substantial (per Lord Millett at p.237).

(7)  It is wrong in principle to conduct a balancing exercise. If the former client establishes the facts in (5) above, the former client is entitled to an injunction unless the defendant solicitors show that there is no risk of disclosure.

(8)  In considering whether the solicitors have shown that there is no risk of disclosure, the starting point must be that, unless special measures are taken, information moves within a firm (per Lord Millett at p.237). However, that is only the starting point. The Prince Jefri case does not establish a rule of law that special measures have to be taken to prevent the information passing within a firm. On the other hand, the courts should restrain the solicitors from acting unless satisfied on the basis of clear and convincing evidence that all effective measures have been taken to ensure that no disclosure will occur (per Lord Millett at pp.237-238, where he adapted the test identified by Sopinka J. in MacDonald Estate v Martin (1991) 77 D.L.R. (4th) 249 at p.269). This is a heavy burden (per Lord Millett at p.239).

82.Bolkiah was followed and applied in Marks and Spencer Group PLC v Freshfields Bruckhaus Deringer [2005] PNLR 4.  In that case, the defendant solicitors had formerly acted for Marks & Spencer in a number of commercial transactions.  The English Court of Appeal confirmed an injunction granted to restrain the defendant firm of solicitors (Freshfields) from acting for another client who was a potential purchaser to buy out Marks & Spencer, on the basis that Freshfields were in possession of Marks & Spencer’s confidential information which might be relevant to the transaction in the potential buy-out.   To avoid any risk of disclosure, Freshfields must be restrained from acting for this new client.

83.Mr Whitehead therefore submits that these authorities clearly support the grant of injunction to restrain a person’s activities if he is in possession of highly confidential and privileged information.

84.Mr Burns SC and Mr McLeish both submit that Bolkiah’s application is only limited to a solicitor/client relationship, or relationship equivalent to the same (as the auditors in that case).  It is so because:

(1)  The language used by Lord Millet in his speech and the facts of the case show that it is a case concerning solicitor/client relationship, which is one of strict confidentiality.

(2)  Moreover, in formulating his test, Lord Millet in his speech relied on Lightman J’s decision in Re A Firm of Solicitor [1997] Ch 1 at 9.  On that part of Lightman J decision, the learned judge emphasized p9E-H the special relationship of a solicitor and client in support of the test as follows:

“The compromise reached under English law can I think be formulated in this way.  (1) The basis of the courts’ intervention is not a possible perception of impropriety: it is the protection of confidential information: see [various authorities cited] (2) In view of the special importance of the relationship of confidence between solicitor and client and of the fact that the solicitor is an officer of the court, the court is particularly sensitive to the need to afford the fullest and, where required, special protection to such confidential information: see [authorities cited]. (3) …” (emphasis added)

See also page 11C-G.

(3)  As such, the strict approach to the protection of confidential information afforded in Bolkiah is only warranted and justified because of the very special relationship between a solicitor and client and the fact that a solicitor a an officer of the court.

85.Mr Burns and Mr McLeish therefore further submit that, for a usual employer and employee relationship, the governing principles in the protection of confidential information are those set out in Faccenda Chicken. 

86.In reply, Mr Whitehead contends that:

(1)  Bolkiah is clearly of general application to protect confidential information which is also privileged.  The principles propounded there are not relationship sensitive but related to the special nature of this type of confidential and privileged information, which warrants a strict approach.  This is borne out by the following parts of Lord Millet’s speech at 236F-H:

“It is in any case difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage.  Where in addition, the information in question is not only confidential but also privileged, the case for a strict approach is unanswerable.  Anything else fails to give effect to the policy on which legal professional privilege is based.  It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret.  This is a matter of perception as well as substance.  It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put the information at risk of coming into the hands of someone with an adverse interest.” (emphasis added)

(2)  Alternatively, the principles apply to situations where the person who obtained the confidential information is in an analogous position of relationship between a solicitor and his client.  In the present case, although Mr Aitken was not employed as a practising solicitor, the evidence at least suggests arguably he was engaged in a position equivalent to an in-house lawyer advising and participating in PCCW’s regulatory affairs, since “[w]hat matters is not the lawyer’s job title but whether he is exercising professional skills as a lawyer.” As such, the Bolkiah principles still apply.  Mr Whitehead cites in aid Hollander, Documentary Evidence (9^th ed), paras 11-31 and 11-32.  

(3)  Mr Whitehead further cites the case of Ablitt v Mills & Reeves (transcript of judgment, 224 October 1995 Blackburne J), where an injunction was granted to restrain a solicitor from acting for a defendant in an ongoing proceedings, on the basis that certain confidential information of the plaintiff in that proceedings had been mistakenly sent to that solicitor (before he was engaged by the defendant).  He submits that this authority supports that if circumstances warrant, an injunction could be granted by the court to restrain a person imparted with confidential information from acting in certain manner or participating in certain activities even though he has obtained such information not via a former professional/client relationship.

87.I accept Mr Burns and Mr McLeish’s submissions that the principles set out in Bolkiah are only limited to a solicitor/client or an analogous professional relationship, where confidential and privileged information is imparted under a strict confidential relationship.  I have come to this conclusion for the following reasons:

(1)  I accept all the observations made by Mr Burns and Mr McLeish set out in paragraph 84 above.  I accept that a solicitor/client relationship is a special one of strict confidence recognised by the law, differing from an ordinary employee and employee relationship where confidential information is imparted via work.   It is this special type of relationship and the fact and a solicitor is an officer of the court that the Court adopts a strict approach to prevent a solicitor from exposing his client to any avoidable risk of disclosure of confidential information.

(2)  I also note that Mr Whitehead has not disputed Mr Burns’ submission that all subsequent cases applying Bolkiah are ones involving solicitors obtaining confidential information in the course of their professional commitments.  This supports the submissions that Bolkiah principles are only limited to those situations where professional and strict confidence relationships are involved.

(3)  It is well accepted that Faccenda Chicken is the leading authority on the categorization of the various forms of confidential information recognised and protected by the law.   Therefore, without proper authority to support the same, I cannot accept Mr Whitehead’s submissions that Bolkiah is a case recognising (and thus creating) a further category of confidential information other than those defined under Faccenda Chicken, which demands a higher and stricter level of protection.  

(4)  I do not think the case of Ablitt assists Mr Whitehead: 

(a)  First, Blackburne J in reaching his conclusion relied on authorities all dealing with the grant of an injunction restraining a firm of solicitors from acting to protect confidential information obtained by them.  This therefore does not assist Mr Whitehead submissions.

(b) Secondly, the case concerns about confidential information in relation to an ongoing litigation passed accidentally into the solicitor’s hand, who then sought to act for the opposing party in the very same litigation.   Thus, Blackburne J made the observation at page 14 that “[t]his is not a case where there is a risk of leakage of confidential information to the persons acting in the matter. It is those very persons who have the information.”  This is thus a case where the Court must act to protect the sanctity of litigation privilege information against a solicitor, who was an officer of the court.  It is not an employer and employee case.

(c)  Third, no restraint of trade arguments were advanced in that case.  As said by Blackburne J at page 14, the defendants’ counsel accepted that the Court had jurisdiction to make the order in question.  In the premises, this case does not assist this Court in considering the general applicability of the principle against the grant of a restraint of trade like injunction in the protection of confidential information as accepted in Faccenda Chicken.

88.Having reached the above conclusion on the applicability of the Bolkiah principles, I now deal with the Plaintiffs’ alternative submissions.

89.First, I do not accept that the submissions that the reliefs sought under paragraphs 1 and 3 of the Plaintiffs’ Summons do not effectively amount to any restraint of trade.  Although I agree with Mr Whitehead that the injunctions if granted would not prevent Mr Aitken from working in the telecommunications field or for PCCW’s competitors generally, the injunctions do have the effective of limiting and narrowing down the areas and scope of works that Mr Aitken could engage himself in.  Looking as such, I regard this as the form of injunction that should be excluded for the protection of confidential information under Cross J’s judgment in Printers & Finishers as approved in Faccenda Chicken cited in paragraph 74 above.  The learned judge emphasized that if an employer wanted to limit the field of activity of his former employee to protect confidential information that had gone into the employee’s memory via work, he should exact a restrictive covenant to do so, instead of seeking the aid of an injunction.

90.Secondly, I also do not accept that the evidence before me support at least an arguable case that Mr Aitken had obtained the relevant PCCW’s confidential information through a relationship analogous to a solicitor/client or the necessary professional relationship to attract the principles in Bolkiah:

(1)  As a starting point, there cannot be any dispute that the relationship between Mr Aitken and PCCW was one of an employee and employer relationship created under the employment contract.

(2)  Any information imparted into Mr Aitken during his time with PCCW is thus prima facie obtained through this employment relationship.

(3)  Although there is no dispute that Mr Aitken had been asked to participate in various conferences and discussions which were heavily legal in nature, I do not think there is sufficient evidence to satisfy me that he so participated in them in a professional capacity as a solicitor or lawyer.  In fact, given that he has not been admitted to Hong Kong as a solicitor, by definition he could not have acted in a professional way in advising, practising or purporting to so advise and practise Hong Kong law. 

(4)  Looking at this from another angle, it cannot be seriously suggested that because Mr Aitken was employed as the General Manager for Regulatory Affairs, and because it also happened that he held a NSW professional legal qualification, there existed between him and PCCW a duty of strict confidentiality to encourage full and frank discussion and disclosure from PCCW, which exists in a solicitor/client relationship.  

(5)  In the circumstances, I am not persuaded by the evidence before me that there is a serious question to be tried that Mr Aitken had acquired PCCW’s confidential information via a professional capacity, and therefore attracts the strict duty of confidentiality imposed upon him, which in turn warrants the strict approach laid down in Bolkiah.

91.For all the above reasons:

(1)  I am not satisfied that the Plaintiffs have shown a serious question to be tried that they are entitled to an injunctive relief in form of paragraphs 1 and 3 of their Summons.  There is thus no question that they be granted an interlocutory injuction in those forms and terms.

(2)  I am therefore also satisfied that paragraphs 1 and 3 of the ex parte order should be discharged in any event.

D1.5  No serious question for trial that CSL has procured or induced Mr Aitken’s breach

92.The burden is on the Plaintiffs to show at this stage a serious claim against CSL for inducement and procurement of breach of  contract or confidence by Mr Aitken.

93.However, there is no sufficient evidence before me to show that before the pre-action letter was sent by HS to CSL:

(1)  CSL was arguably aware of Mr Aitken’s possession of PCCW’s relevant confidential information.

(2)  CSL has procured or induced or threatened to procure or induce Mr Aitken to disclose or misuse this confidential information.

94.There is thus no evidence before me to support an arguable case of alleged inducement or procurement of breach of contract or confidence for conducts before the pre-action letter.

95.Further, even in relation to conducts after the pre-action letter, and after CSL has been put on notice of the allegation of confidential information relating to the FMIC issue, I also have not seen sufficient evidence to support an arguable case of direct inducement or procurement of breach by CSL. As far as I can see, there is no evidence to even remotely suggest that CSL has exerted or has threatened to exert pressure, active persuasion or enticement of Mr Aitken to disclose confidential information.  See: Clerk & Lindsell on Torts (19^th ed), paras 25-41 to 25-52.

96.I accept the Plaintiffs’ submissions that CSL’s silence as to whether it would continue to actively engage Mr Aitken to participate and be involved in the discussions and affairs concerning FMIC issue supports an arguable case that CSL would continue to engage Mr Aitken in these activities. 

97.But that alone in my view is also insufficient to show that there is an arguable case of indirect procurement of breach of confidence.    There is nothing before me to show that CSL intended Mr Aitken to breach the confidence, and with this object in view “definitely and unequivocally” persuaded, induced or procured Mr Aitken to breach the confidence.  See:  Clerk & Lindsell on Torts (19^th ed), para 25-54.

98.For these reasons, I conclude that there is no serious question to be tried for a claim against CSL for inducement of breach of contract or confidence.  On this basis, I cannot see why an interlocutory injunction should be granted against CSL.

E.  Whether damages are a sufficient remedy for the Plaintiffs

99.Given this being a case of confidential information, I accept that damages would not be a sufficient remedy for the Plaintiffs if an interlocutory injunction is wrongfully not granted.  I do not think Mr Burns SC and Mr McLeish are seriously arguing otherwise.

F.  Whether damages are a sufficient remedy for Mr Aitken

100.Mr Aitken says if restrained, he is “unlikely” to be continued to be employed by CSL.  He also says given the specialized nature of the work that he does, and the small size of the Hong Kong market, it is also unlikely that he would be able to find work in Hong Kong. 

101.Mr Aitken further says if he could not find any work, he would lose his employee visa in Hong Kong, and unless his wife is employed, the whole family (including his two children who have since settled respectively into their schools here) would have to be relocated out of Hong Kong.

102.For these reasons, Mr Aitken says damages are clearly not a sufficient remedy for him, if an interlocutory injunction is wrongfully granted against him.

103.I do not accept Mr Aitken’s case.

104.First, I am not satisfied from the evidence that even if an injunction is to be granted against him, he cannot perform substantially his role at CSL and is likely to be “sacked”:

(1)  At paragraph 91 of his 1^st Affidavit, Mr Aitken sets out the various and many roles and duties he has to perform as the Head of Regulatory and Corporate Affairs at CSL. 

(2)  I note that matters that relate to FMIC and interconnection issues constitute only but a few of these many functions and duties.  There is no evidence to show that matters concerning these issues constitute effectively the entire or substantially the entire duties he has to perform at CSL.

(3)  There is also nothing in CSL’s evidence to suggest that even if Mr Aitken is to be restrained to deal with FMIC and interconnection issues as sought by the Plaintiffs, CSL would find him not employable and would dismiss him.

105.Given I do not accept from the evidence that Mr Aitken would lose his job at CSL by reason of the injunction (if granted), Mr Aitken’s other grounds to suggest that damages are not a sufficient remedy also fail, since they rest on the fundamental basis that Mr Aitken would lose his job at CSL and would not be able to find a job of similar capacity in Hong Kong.

106.I am therefore satisfied that damages would be a sufficient remedy for Mr Aitken, even if the injunction is wrongfully granted against him.

107.Given my conclusion that damages would not be a sufficient remedy for the Plaintiffs, but would be so for Mr Aitken, I should exercise my discretion to grant an interlocutory injunction.

G. Balance of convenience

108.However, if I were wrong on this, and damages were not a sufficient remedy for Mr Aitken, after taking into consideration of all the circumstance of this case, on the balance of convenience to preserve the status quo ante, I would have also exercised my discretion in favour of granting an interlocutory injunction, in order to preserve the state quo ante (i.e., the confidential information) until trial.

H.  Material non disclosure

109.Mr Burns SC and Mr McLeish submit that the Plaintiffs are guilty of the following material non disclosure before in obtaining the ex parte orders:

(1)  The Plaintiffs should have but failed to disclose the fact that, before joining PCCW, Mr Aitken had previously worked for CSL in dealing with FMIC/FMC issues.  This is material to the learned judge’s exercise of discretion since that provides the background to Mr Aitken’s contention that his involvement in FMC/FMIC issues at PCCW could only be and was peripheral.

(2)  The Plaintiffs misrepresented to the ex parte judge in the evidence, that Mr Aitken’s work at PCCW was analogous to a solicitor/client relationship by emphasizing Mr Aitken’s legal qualification as a foreign solicitor, and acted as an adviser to PCCW.  The Plaintiffs so misrepresented the picture so as to boost their misplaced reliance on Bolkiah to support their application for injunctive relief under paragraphs 1 and 3 of the ex parte order.

(3)  The Plaintiffs misrepresented the position of their waiver of the non compete clause in Mr Aitken’s employment contract, in that they termed it as waiver of garden leave.  They also failed to present the fact that Mr Aitken had bought out one month of his three months notice period of termination, but misrepresented this as part of the Plaintiffs’ wavier. 

(4)  The Plaintiffs had also failed to draw the ex parte judge’s attention to the fact that, even if the non compete clause had not been waived, the non compete period would have expired on 20 June 2008 (only 7 days after the hearing of the ex parte application).  Counsel for Mr Aitken and CSL say that these facts are material to the judge’s exercise of discretion, since it supports the argument that the Court would not grant an injunction to restrain use of confidential information which would amount to a non compete clause.  Mr Burns further submits that the Plaintiffs, in discharge of their duty of full and frank disclosure, should have also drawn the court’s attention to the legal argument against the grant of a restraint of trade equivalent form of injunction.

110.I will deal with each of these alleged material non disclosure as follows.

111.The Plaintiffs would have a duty to draw the Court’s attention to Mr Aitken’s previous involvement at CSL, if they were or should have been aware that Mr Aitken might raised the argument that his involvement in the FMC/FMIC issues at PCCW were only peripheral and non essential. 

112.I am however satisfied that there is nothing to suggest that PCCW was or should have been aware of this potential contention to be raised by Mr Aitken, given:

(1)  The documentary evidence of Mr Aitken’s apparent significant degree of involvement in the FMC/FMIC issues at PCCW (as discussed above), and

(2)  Mr Aitken’s own email sent to Mr Chiron on 10 October 2006 before he joined PCCW, stating that he could be involved in FMC and FMC litigation without any restriction,

113.There is therefore no material non disclosure on the Plaintiffs’ failure to bring to the attention of the ex parte judge of Mr Aitken’s previous employment with CSL.

114.Similarly, I do not think the 2^nd complaint is established.  I have read the respective 1^st affidavits of Mr Crosswell and Mr Chiron.  I do not get the impression they seek to distort or misrepresent the position of Mr Aitken’s role while working at PCCW as alleged.   The picture presented is that Mr Aitken is legally qualified overseas, he was recruited as the General Manager of Regulatory Affairs, but in addition to his other duties under the post, he had been closely involved in various legal and strategic discussions concerning the 2007 Statement, and a number of legal proceedings.   In my view, there is no material non disclosure in presenting such a picture.

115.I also do not find a case of material non disclosure under the 3^rd complaint.  In my view, the facts on the waiver and buying out of the notice period are not relevant to the exercise of discretion in deciding whether or not to grant the ex parte order.

116.However, I find substance in the 4^th complaint of material non disclosure.

117.For the reasons I have discussed at paragraphs 73 to 91 above, I accept Mr Burns SC and Mr McLeish’s submissions that, to discharge the strict duty of full and frank disclosure, the Plaintiff should have drawn to the attention of the ex parte judge the legal arguments against the grant of an interlocutory injunction which may amount to a non compete or restraint of trade clause.  In particular, I think the ex parte judge should have been drawn to the authority of Faccenda Chicken (being the leading authority in confidential information in an employer and employee situation) and the observation of the Court of Appeal at pp 137G-138A in adopting Cross J’s judgment in Printers & Finishers.

118.In my judgment, it would be material to the ex parte judge to have the benefit of these well known authorities to enable her to properly exercise the discretion in deciding whether to grant or not all the reliefs sought under the ex parte application.

119.The failure to draw the ex parte judge’s attention to these authorities and the potential arguments against the grant of a restraint of trade equivalent injunction, amounts to in my view a material non disclosure.

120.In the premises, I will set aside the ex parte orders on this basis.

121.However, Mr Burns SC and Mr McLeish have fairly accepted that, even if I am to set aside the ex parte order on the basis of the above material non disclosure, they are not submitting that no interlocutory injunctive orders should be re-granted, on the basis that the Plaintiffs intended to make these material non disclosures, or that they had acted without good faith. 

122.I am therefore free to consider whether to re-grant an interlocutory injunction.

123.For the reasons I have set out above in this judgment, I am minded to grant an interlocutory judgment, subject to what I see as the proper and reasonable terms that should be incorporated to protect the Plaintiffs’ confidential information at this interim stage.

I.   The terms of the injunction sought are too wide

124.I agree that the terms of the interlocutory injunction sought under the Plaintiffs’ Summons (and thus also under the ex parte order) are in any event too wide and should not be granted on those terms:

(1)  In relation to the reliefs sought under paragraphs 1 and 3 of the Plaintiffs’ Summons, for the reasons set out above, they are clearly too wide and the Plaintiffs are not entitled to them.

(2)  In relation to the reliefs sought under paragraphs 2 and 4, they are too vague and too generally, which should not be granted for the principles set out in paragraphs 51 to 53 above.

IV.    Conclusion

125.For the above reasons:

(1)  I will allow Mr Aitken’s Summons and set aside the ex parte orders granted against him.  I will make a nisi order that costs of the ex parte application and Mr Aitken’s Summons be to Mr Aitken.

(2)  I will allow CSL’s Summons and set aside the ex parte orders granted against CSL.  I will make a nisi order that costs of the ex parte application and CSL’s Summons be to CSL.

(3)  I further order that Mr Aitken and CSL are at liberty to apply for directions for enquiry as to damages suffered by them respectively as a result of the ex parte injunction.

(4)  Under the Plaintiffs’ Summons, I order that until trial or further order of the Court, Mr Aitken shall keep confidential, and shall not disclose the following confidential information to, or use for the benefit of, anyone, including CSL and its directors, employees, servants and/or agents:

(a)  The information relating to, and the contents of, the discussions of legal strategy issues concerning FMC and FMIC, including the position of the MNOs in FMIC negotiations and related competition law issues made at the meeting held on 30 May 2007 and attended by Mr Aitken, Mr Chiron, Mr Crosswell, Mr Johnston (by telephone link), Ms Winifred Lo, Mr Kevin Chu, Mr Tang Wing Ho and Ms Cindy Au. 

(b) All the matters and information concerning, and the contents of, the document circulated by Mr Crosswell on 6 June 2007 entitled “PCCW/FMC Statement Potential Legal Avenues of Challenge – Scoping Document”.

(c)  All the matters discussed in a meeting held on 7 June 2007, between the Herbert Smith Team and the PCCW Team relating to the above scooping document.

(d) All matters and information concerning, and the contents of, a 59 page draft instruction to counsel containing 29 pages of detailed appendixes sent by Mr Crosswell on 15 June 2007.

(e)  All matters and information in relation to, and the contents of, an email sent by Mr Crosswell on 20 June 2007 to Ms Winifred Lo and Mr Kevin Chu, seeking further information for the draft instruction to counsel circulated on 15 June 2007.  

(f)   All matters and information in relation to, and the contents of, the final instruction sent to Mr Pannick QC on 20 June 2007.

(g)  All matters and information in relation to, and the contents of Mr Pannick QC’s advice received by Herbert Smith on 4 July 2007 concerning the grounds on which the 2007 Statement could be challenged.

(h)  All matters and information in relation to, and the contents of, the telephone conference held on 5 July 2007, between Mr Aitken and members of the PCCW Team and the Herbert Smith Team discussing Mr Pannick QC’s advice.

(i)    All matters and information in relation to, and the contents of, the telephone conference held on 10 July 2007, which was attended by Mr Aitken, Mr Pannick QC, Mr Crosswell, Ms Cindy Au and Mr Chiron discussing the above advice. 

(5)  I dismiss the Plaintiffs’ Summons insofar as the application is made against CSL.

(6)  The parties are at liberty to apply, including making an application for directions for a speedy trial.

126.I further make an order nisi that (a) the Plaintiffs’ costs of the Plaintiffs’ Summons as against Mr Aitken be in the cause of the action, (b) CSL’s costs in relation to Plaintiffs’ Summons be in the cause of the action.

127.Unless application in writing is made by any of the parties to vary the same, all the nisi orders will become absolute 14 days after the date of this judgment.

128.It remains for me to thank counsel for their helpful assistance.

Mr. Whitehead, Robert, S.C., instructed by Messrs Herbert Smith for 1^st and 2^nd Plaintiffs.

Mr. Burns, S. Ashley, S.C., instructed by Messrs JSM for 1^st Defendant.

Mr. McLeish, Robin, instructed by Messrs Freshfields Bruckhaus Deringer for 2^nd Defendant.

(I) Interlocutory appeal dismissed: see CACV194/2008 dated 21 August 2008. (II) Plaintiffs' application for temporary injunctions pending an appeal to Court of Appeal granted by Court of Appeal. Please refer to HCMP1294/2008 dated 23 July 2008